In an (especially for Japanese tastes) strongly worded joint statement, Toshiyuki Shiga. Chairman of Japan Automobile Manufacturers Association, and Koichiro Nishihara, President of the Confederation of Japan Automobile Workers’ Unions threw down the gauntlet to the Japanese government. Executive summary: “We are sick as hell of the high yen and we can’t take it anymore. Do something, or kiss those jobs sayonara.”

Current foreign exchange rate levels represent, for the yen, an appreciation that not only far surpasses all prior projections by Japanese automakers, but also totally fails to reflect Japan’s economic fundamentals.

Over the decades, the Japanese automobile industry has carried out a steady series of cost-cutting and other measures necessary to maintain its international competitiveness. The yen’s present exchange rate level, however, clearly exceeds the limits of such efforts. The continuation of this trend seriously threatens the ability to maintain the foundations supporting the manufacturing craftsmanship that has long been the basis of Japan’s competitive edge. There are also fears that these currency market conditions will have a profoundly adverse impact on employment throughout Japan’s motor industry, including the parts supply and other vital sectors.

Having been heavily affected by the devastating March 11 earthquake and tsunami, automobile production in Japan is at last moving towards recovery. The yen’s excessive appreciation risks gravely hampering this nascent recovery and, in doing so, imperiling the resurgence of Japan’s weakened economy.

In view of these realities, JAMA and the CJAWU strongly demand that the Japanese government take swift and effective action aimed at reducing the yen’s current strength.

In other countries, talk like this would be shrugged-off as posturing. A joint statement by employers and unions would raise eyebrows anywhere. In highly polite Japan, such a statement is the last step before a suicide note. Shiga is also the COO of Nissan, a company far less exposed to the high yen than Toyota or Honda. One dollar buys 80 yen today.

The latest rise since the tsunami is mostly due to Japanese insurance companies selling investments denominated in other currencies and buying yen with the proceeds of the sales to pay claims. The yen has been popular for years with foreign investors because of the yen carry trade. Borrow yen and them to invest in other things. An effective negative interst rate will make your currency popular with the rest of the world.

Interest rates are pretty much zero, and they’ve been dropping money from helicopters for the past 20 years. At this point, there don’t seem to be any bullets left in the gun.

I expect we will see a further hollowing out of the Japanese economy. Even if they manage to repair their damaged factories, getting reliable power won’t be quick or easy. Japan also has low immigration and a rapidly aging population. The high Yen is just another nail in the coffin.

I expect Japanese industry will continue to relocate to “cost to market” regions, or close to major markets.

Simple. Print money, or as its called in the modern vernacular “quantitative easing”. Basically issue government bonds and have the government buy said bonds. Everyone’s doing it.

The Japanese in particular are pioneers in this method, but the US in particular are world leaders at this point as “QE2″ is in full swing. The downside is that it expands national debt, the upside is that its ‘non-sovereign debt”, so you owe money to yourselves. Which is what Japan’s massive 5 trillion debt really is.

The obvious problem is inflation and weakening buying power. Which most countries are suffering from right now, the problem for Japan is that QE2 is expected to end in later half of this year, meaning that the yen will have the natural tendency to weaken.

The real problem right now is that Japanese companies have expected that Japanese politicians would launch a massive campaign in spending to rebuild after the quake. The DPJ has refused any dramatic QE methods, worse, there has been a ton of infighting within the DPJ due to Ozawa wanting to take back power, as the recent no-confidence election has shown. Now with a ton of political parties, including the old-guard LDP to muck it up, Japan’s real problem is fragmented politics that really aren’t able to find consensus to move forward.

Its a mistake to think of Japanese unions in the context of American unions…

The JAW is nothing like the UAW, they actually have little to no bargaining power. Japanese union laws restrict industry-wide collective bargaining for unions, which means that each manufacturer has their own union, and only the workers union can negotiate their wages with the company they work for (a union group like the JAW cannot represent them). Moreover, each manufacturer’s union is further partitioned into smaller unions, one for factories/offices, another for dealers, and another for suppliers.

For this reason, the Japanese Automotive Workers Union is just a group to coordinate these sort of announcements. They are largely irrelevant.

Obviously this system makes it difficult to organize massive strikes or walk-outs like you see in other countries, and Japanese unions have little power compared to the US, much less Europe. But Japanese business mindset is very different. While the employment-for-life is now a thing of the base, lay-offs are still regarded much more taboo than in West. Further more, most executives are usually promoted from within and are part of the union themselves so they tend to be a lot more sympathetic regarding labor issues.

Hi, I’m your union representative. I want to make sure the $50,000 you are earning, will only be worth $25,000. While at the same time quadrupling the interest you will be charged for every loan you may consider taking up.

But it will all be well, since I’ll do the same thing to everyone else, so you get the satisfaction of knowing that other people are even worse off than you are. That is what we do, you know. Screw you a little bit less than the next guy. Which, as you know, is very popular these days, after decades of progressive indoctrination hammering into your heads that the only thing that matters, is measuring how you stack up compared to some other group or class. It’s always “us” vs. “them”. And we, the nice guys leeching off of your dues, will always be looking out for you, you know. Nudge, nudge, wink, wink…..